Multiple Rating Agencies Will Sanitize The ICO Industry

The decentralized ledger technology (DLT) ecosystem is currently caught between a growing rate of indiscipline and suggested regulation.

The current absence of any form of regulation has been blamed for several hazards faced by investors and other participants especially in the ICO industry.

Despite proving to be a very effective method of raising capital to originate a new product or improve an existing one, the pain caused by the associated inconsistencies within the ICO industry cannot go unnoticed.

Perhaps, finding a balance between retaining a decentralized ecosystem and protecting the participants is currently an issue of utmost interest within the community.

ICOs should be regulated by private agencies

Blockchain and ICO Consultant, Nadine Damblon thinks that the idea of a seal of approval for ICOs is important for the industry.

Damblon comments that since there are huge differences between these ICOs, the idea of a private rating agency would be a welcome idea.

She says:

“I would like the idea of a private rating agency, but as soon as the government steps in, I’m afraid that it would have a negative influence on the whole movement. We might eventually become flooded with thousands of regulations and ICO would almost be no different from IPO”.

Damblon also thinks that the absence of regulations are the reason a lot companies, and startups, are turning toward the ICO phenomenon. Therefore, a private, or more appropriately, a lot of private rating agencies to guarantee the competition would be really helpful, especially for newcomers, to get an overview and to build up trust.

Rating agencies will safeguard participants

COO of BitLand, Larry C. Bates shares the same opinion with Damblon towards regulating the ICO environment. Bates also agrees that considering the decentralized nature of the space, having multiple ratings agencies appears to be the best option.

He continues by noting that due diligence is a task that should be shared by the community. In his example, the CoinDash ICO participants sent 8 million dollars to the wrong address for 3 hours because there is no real source of information about ICOs that is a trusted outlet.

Bates tells TTMNews:

There are too many special interest groups that take money to get listed or to get mentioned that the ICO industry is currently mostly backroom deals and insider trading. If there were trusted agencies that gave ratings on the companies or organizations putting on the ICO and it wasn’t the standard “Check their Github” lazy due diligence from the community, there would be way fewer people who get separated from their money under questionable circumstances”.Bates comments that after another week of ICOs being hacked and tens of millions being lost, the crypto community is finally realizing that some level of regulation is going to be necessary.

It is an issue of balanceHe continues by noting that there has always been a justified fear of over-regulation crushing the blockchain industry growth, however that fear should not prevent rational regulations from being implemented to protect people from easily avoidable scenarios.

“Not that a government should be rating the ICOs, but if a government entity funded NGOs to rate ICOs, I believe you would see a LOT fewer scams happening, and there would be no need to completely get rid of ICOs”, says Bates.

He concludes by noting that what people are looking for is a delicate balance between light regulation and freedom for the private sector to innovate without fear of legal repercussions, pointing out that the industry is getting closer, and in essence some sort of ICO rating agencies will bring the ecosystem even closer to that ideal market state.